Guam
Exploiting The Gray Zone
Guam Eyes China's Tourism Potential
As the phenomenal expansion of the Chinese economy shakes up virtually every aspect of global business, regional tourism officials have their eyes on the leisure travelers that will inevitably begin to spend the wealth that is accumulating in the giant neighbor to the west. In order to gain some insights into the potential Chinese market, the Guam Visitors Bureau hosted Jennifer Lee and Kevin Chambers, commercial officers with the U.S. Embassy in Beijing and the U.S. Consulate in Shanghai respectively, as speakers at its quarterly membership meeting on July 20. China’s potential was underscored when Lee said that the number of outbound travelers from China will reach 100 million by 2020, according to World Tourist Organization projections. “We have to pay attention—100 million outbound visitors,” says Bruce Kloppenburg, GVB vice chairman. “Japan (Guam’s major market currently) has 20 million outbound international travelers, so China’s a heck of a market.”
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| Guam’s thriving Tumon Bay strip. [photo: Samantha Magick] |
Chinese travelers are also adopting travel practices similar to tourists from other highly valued markets. “They were traveling more on economy packages with Chinese food...usually cheap accommodations and they’ll spend most of their money on Louis Vuitton and other high-end consumer goods,” Lee says. “But, they’re getting tired of cheap travel.”
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| Jennifer Lee encourages the Guam tourism industry to market itself in China, and partner with a reputable Chinese tourism agency. [photo: Frank Whitman] |
Restrictions on U.S. tourist visas and the availability of airline seats are also significant limiting factors. Visa applicants must report to one of the five U.S. Consulates for an interview, limiting opportunities for those who live outside of heavily populated areas. During 2005, 292,000 nonimmigrant visas were approved, 77 percent of which were tourism related, says Lee. Visa processing itself “has seen a lot of improvement in the last year or so,” she says. “We’re expecting probably a 20 to 30 percent increase in visa processing in the next year or so.” While she was not sure about the status of Guam’s efforts to secure a separate designation to ease visa restrictions, Lee did not offer much hope. “I’ve heard that it’s very difficult sometimes to separate, so that’s an issue,” she says. “I’m not sure that that’s going to be a possibility. The good news is that on the federal level, (the United States is) already in talks with the Chinese about ADS.”
Air travel out of China is limited by inadequate infrastructure and outdated regulation, said Chambers. Both are the result of an industry growth rate—15 percent per year—that is outstripping efforts and resources to keep up with it. The result is that 72 percent of outbound international travel originates from three hubs—Beijing, Shanghai and Guangzhou.
“Most of the opportunity, in the short term for Guam are the big three markets,” says Chambers. The desirable higher end travelers are similarly located in a geographic area near the country’s coast. “It’s a problem for China, but easier for a destination like Guam to target (for marketing).”
As negotiations with the U.S. to increase air traffic between the countries proceed, Continental Micronesia, Guam’s dominant carrier, is lobbying to have Guam and Saipan excluded from “frequency caps”—the number of flights permitted under any final agreement. Once an agreement is reached, U.S. officials award routes to interested airlines. “Then the U.S. Department of Transportation has a fiduciary responsibility to select the [airline] proposal that has the largest potential for economic positive benefits,” says Wally Dias, Continental Micronesia vice president for sales and promotion. “We’re at a disadvantage if we go through that process.”
Since June 2005, Continental has been flying between Beijing and New York. “The Continental sales and marketing activity in the PRC is actually managed from Guam,” Dias says. “We’re hoping that Department of Transportation will again (propose the
frequency-cap exclusion) and because of the relationships that we’re trying to build right now, maybe (the Chinese government) might say, ‘okay.’”
Currently, the Guam Visitors Bureau is devoting $175,000 of its $9 million annual marketing budget to promote Guam in China ($6 million is designated for Japan). “We’re appealing to the upper scale market,” says Pilar Laguana, chairwoman of the GVB’s China Marketing Committee. Though regulatory hurdles are in place, “in the meantime we are attracting experienced Chinese travelers who have been either to Europe or the U.S. mainland and also the ex-pat market—for example, the Japanese or Koreans that are living and working in Shanghai.” The expatriates in China number about 300,000, she says. During the first six months of 2006, of a total of 607,000 visitors to Guam, 606 originated in China.
Lee offered the GVB members some advice. The Chinese MICE (the term stands for meetings, incentives, conferences and exhibitions and refers to group business travel) market has enormous potential and involves relatively high margins, she said. “It also has the most potential because at this point...anything linked to business is easier for them to get a U.S. visa.” She offered examples of Chinese companies traveling with thousands of employees.
She also advised potential suppliers to partner with a reputable Chinese travel agent and to promote. “If you promote yourself in the market you will definitely get more visitors,” she said. “Right now there are a lot of destinations that are not really active in the Chinese market. Maybe they ‘re waiting for changes in policy but first-mover advantage is very important.”
